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Hi for robby 6/12, there is a revaluation gain of $5m which will be CR in OCE for Hail. For Zinc there is a revaluation gain of $2 would this be classified under CR OCE and not RE?
the joint venture- why would you CR $6m for joint venture?
and why would you DR OCE 11 and CR RE 11? as i thought this has already taken into effect of the (1.89m)
“Hi for robby 6/12, there is a revaluation gain of $5m which will be CR in OCE for Hail. For Zinc there is a revaluation gain of $2 would this be classified under CR OCE and not RE?”
Are you sure these are revaluation gains? Or are we talking about working 2 in the printed solution:-
“On consolidation, there will be a reversal of the fair value adjustments to the investment held at fair value through profit and loss. Further, the dividend income on investment should be taken to profit or loss and not other comprehensive income.
Therefore the adjustments required are:Dr Other comprehensive income 5·00
Cr Investment in Hail 5·00
Dr Other comprehensive income 2·00
Cr Retained earnings 2·00”“the joint venture- why would you CR $6m for joint venture?”
Where have you seen this? I’ve checked the question AND the answer and cannot see a credit of $6m for the joint venture – maybe it’s me that’s missing something
“and why would you DR OCE 11 and CR RE 11? as i thought this has already taken into effect of the (1.89m)”
Karen, it would help me enormously if you were to refer to a working reference or at least the paragraph / point number from the question.
yes both are revaluation gain, unless i understood it wrongly.
note 3 states the joint venture.
note iv states robby purchases PpE of $10m on june 2000. it has expected life of 20 years and is dep in straight line, on 31/5/2002, ppe revalued at $11m at may impairment lndicators triggered an impairment review of ppe, recoverable amount is 7.8m. the only accounting entry posted for the year to 31.5.2003 was to account dep based on revalued amount at 31/5/2002. robbys accounting policy is to make a transfer of the excess dep arising on the revaliation of ppe.
impairment loss is 2.59 and revaluation gain is 1.89. so i thought DR RE 0.7, DR OCE 1.89 and CR 2.59 PPE.. why would you still DR OCE 0.11 and CR RE 0.11 on the movement of the dep, i thoight this was initially included in the above calc.
“why would you still DR OCE 0.11 and CR RE 0.11 on the movement of the dep, i thoight this was initially included in the above calc.” is your question
“The only accounting entry posted for the year to 31 May 2012 was to account for the depreciation based on the revalued amount as at 31 May 2011” is the printed solution
I can see the joint venture in note iii, but you missed the point. Your post says:-
“the joint venture- why would you CR $6m for joint venture?”
I’m sorry Karen, but I cannot see where $6m has been credited for the joint venture. I can see where $6m (our share of the the construction cost – 40% x $15m) has been recorded, but I cannot see the $6m credit to which you refer!
Please give me a reference for the revaluation gains (paragraph / point number from the question)
in solutions the SOFP it states that for joint venture 6-6=0, i just dont understand this wmhole transaction. can you briefly explain please.
joint venture- robby has 40% of a share joint arrangement, hence he will be getting 40% of this profit? what does this mean robby has only contributed and accounted for its share of the construction cost, paying $6m.?
That’s what the question says!
If I remind you that IFRS 11 (?) now requires joint arrangements to be accounted for under the equity method, does that help?
Investment in the jv should be at cost + share of post-acq profits – any impairment
You still refuse to give me a reference! I really do not want to trawl through the question and answer in full – again.
If you want me to try to explain something, please give me a sporting chance!
it is note (iii) in pass paper 6/12.
so the cost is $6m, -0.68profit = 5.32m? according to answers there is nil joint venture in the sofp.
The investment in the joint operation is included in working 8 and therefore in the answer as PPE (6.12)
There is also a receivable from the other venturer shown in working 9 (current assets, amount $8.00) and a payable to the other venturer included within working 10 (current liabilities, amount $6.60)
OK?
IFRS11 has changed it anyway. Now account for a joint venture using the equity method (as though it were an associate)
even better. so its like the cost of associate plus post acqn profits then?
Robby has treated Hail at fair value through other comprehensive income but the gain (55-50 =5) has been debited to o.c.e!
Isnt it wrong?
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